Grace Ashiru
Safaricom’s M-PESA has forged an International Money Transfer Agreement with Onafriq, Africa’s leading digital payments network across 40 countries. This partnership aims to enhance the efficiency of remittance flows to Ethiopia.
M-PESA provides accessible financial solutions through mobile phones, eliminating the necessity for a bank account and only requiring a Safaricom sim card. This partnership enables individuals in Ethiopia to receive remittances globally via M-PESA, following approval from the National Bank of Ethiopia to initiate remittance services in July 2023.
The World Bank has recently reported a significant surge in remittance flows to sub-Saharan African countries in 2023, reaching an impressive $54 billion. This growth is particularly notable in countries such as Mozambique, Rwanda, and Ethiopia. While this is a positive trend, it is crucial to recognize that further efforts are necessary, as remittances play a vital role in poverty reduction and contribute significantly to GDP.
Ethiopia’s Director General of Ethiopian Diaspora, Mohammed Endris, has emphasized the crucial role of remittances, which make up 40-50% of GDP in certain countries, in stark contrast to Ethiopia’s 5% share. Collaborative efforts such as the M-PESA Safaricom and Onafriq partnership are anticipated to bolster this ratio significantly.
By integrating International Money Transfer capability, M-PESA’s reach expands significantly through Onafriq’s extensive network, connecting 500 million mobile money wallets and 200 million bank accounts. This broad connectivity streamlines domestic and cross-border transactions, card issuance and processing, agency banking, and treasury services.
Paul Kavavu, General Manager at Safaricom Ethiopia, stated, “Our objective is to streamline the payment process, and the integration of International Money Transfer services into M-PESA aligns perfectly with that goal. Ethiopia sees an annual inflow of over five billion USD in remittances, and this collaboration will offer the Ethiopian Diaspora a convenient and efficient formal channel to send money to their families in Ethiopia.”
Nika Naghavi, Group Head of Growth at Onafriq, is confident that the partnership will play a pivotal role in advancing Ethiopia’s digital transformation strategy. The collaboration will be in line with the ‘Digital Ethiopia 2025’ initiative, fostering financial inclusion, driving banking innovation, and encouraging the adoption of digital solutions.
